Monthly Balance

As March comes to a close today, much of the action can be characterized by wide swings pushing the upper and lower range extremes. So indeed, price seems to have traveled great distances, but when compared to February settlement, price has essentially gone nowhere with barely positive reading. All this “wheel-spinning” has created a very wide “balance zone” value-area within 1845 – 1865 with a slight skew at the upper edge High Volume Node (HVN) 1865… Price will need to break through and convert either of these zones to expand directionally.

“There is every reason to be optimistic: The major indices (S&P 500 and Dow) have held; the public is scared (bulls are at the lowest in seven weeks, according to AAII); short interest is at the highest level since September 2011; and Investment Dealers’ Digest points out that April is traditionally the strongest month of the year for the Dow, averaging a 2% gain since 1950.”

So…April should be an interesting trading month!

June E-mini S&P’s (ESM14) this morning are up +0.31% in quiet trade, in middle of balanced value area zone. We begin the session with a “neutral” disposition and will let Mr. Mkt give us hints for next directional move. Just not too much to get excited about today…but stick around as anything can and does happen.

IF price can penetrate Prior Day High (PDH) 1859.50 and convert, THEN upside price targets 1861.25 – 1864.50, with extreme levels measuring 1866.75 – 1870.25. Any pullback in price is anticipated to find a buy response within 1847 – 50 zone (3DCPZ). Any trade beyond these parameters we will dynamically update in Trading Room.

Remain Flexible….ALWAYS USE STOPS!

Good Trading…David

Habitude Eight
I can recover from any setback. I have an attitude of abundance. I affirm abundance in the universe. I know I cannot begin to count the stars. I realize the ocean doesn’t care whether I go to it with a bucket or a teaspoon. I know the market provides a river of opportunities. I invest in my capabilities. I will be happy with my results.

Containment

Although the official monthly / quarterly (T+3) reporting performance for mutual funds is closed, Mr. BIG should continue to buy the dips in order to curtail any further weakness and contain (stabilize) price.

Yesterday’s price boundaries 1848 – 1835 were spot on, so we will continue to watch these levels for a shift in the demand / supply equation. IF price can find a strong bid, penetrate and convert above the 1848, THEN price targets remain 1852 – 55 zone, followed by 1857 – 60 zone. Failure to convert 1848 calls for pullback within prior session trading range, with 1840 – 42 being mid-range support. Violation of prior day low (PDL) 1834, targets 1823.50 – 1821.50.

Stay Flexible….ALWAYS USE STOPS!

Good Trading….David

Habitude Seven
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.

1st Quarter End

Computer issues have kept the blog postings offline for past couple days, but all is fixed and we’re back to normal.

For those that are not fully aware, yesterday’s trade marked the 1st quarter end for Mutual Funds…”Trade Date plus Three” or “T+3”. So…prior session sell-off may not be a total surprise to the “informed” trader/investor, as Mr. “BIG” has been using any recent strength to sell their winners…yesterday was no exception. This action continues to support the building viewpoint that the “BIGS” are working on adjusting portfolio risk given recent comments from the Fed.

Let’s get to the numbers…

Recent 3-day cycle low is marked at 1848.00…Price is currently below this level should act as resistance on any rally attempt. IF price can penetrate and convert this level, then 1852- 55 zone (3D CPZ) becomes the next hurdle.

Prior Day Low (PDL) 1841.50 is initial support marker for bulls…IF negative price momentum remains intact with a violation and conversion of this level, THEN deeper downside targets measure 1835 – 38 zone, followed by 1833.75…1831.25…1828.25 Breakdown Target.

Remain Flexible….ALWAYS USE STOPS!

Good Trading,

David

Habitude Six
I am at peace with uncertainty. I know there is no such thing as a sure thing. I have no particular need to be right. I understand that being perfect has no place in trading. I am flexible. I am willing to change my mind. I am alert to scenario changes. I accept the information that tells me I am on the right track or on the wrong track.

Neutral Zone

Friday’s Quadruple Options Expiration initially pushed prices higher to hit our upper objective zone between 1874 – 78…HOD 1876.75…only to be followed by Noon Reversal that drove prices down to our stated lower price objective 1856 – 58 zone. It’s a rare event that both upside and downside price objectives get hit within same session, but with options expiring, we know anything can happen…and did.

Early morning trade has price trading in what we’ll classify as the “Neutral Zone”… Oscillating around the Three-Day Central Pivot Zone(3DCPZ). Trade expectation is for early “non-directional” trade action until either of the upper and lower boundaries outlined above is breached.

Remain Flexible…Follow Your Trade Rules…ALWAYS USE STOPS!

Good Trading…David

Habitude Five
I think in terms of probabilities. I do not know, all I have are probabilities. Probabilities are at the core of my decisions. Through consistent application of the probabilities, I will win.

Quadruple Witching…Bulls Firmly in Control

Today is Quadruple Option Expiration as Bulls regain firm control. The one day price dislocation related to Fed’s ZIRP statements is quickly fading as price is now pushing up against recent highs.

Yesterday’s strength continued into the overnight session as price is currently above prior day high (PDH) 1866.50. IF price can hold above on any pullback, THEN upside targets 1870 – 72 zone, followed by 1874 – 78 zone remain in-play.

Violation to the downside of PDH suggests a pullback to intra-day VT-POC near 1860 down through 1856 – 58 zone. If trade occurs below this zone, we will update dynamic levels in the trading room.

Bulls remain firmly in control, and as such, we have continued to give them the benefit this past week, rightly so. No change in this viewpoint…Buying the pullbacks to key reference zones remains the trade strategy, while being opportunistic with intra-day trade setups.

Stay Disciplined….ALWAYS USE STOPS!

Good Trading,

David

Habitude Four
I am at ease with controlled risk. I will risk and I will win. I am courageous. I will take a chance. I manage risk to my comfort level. Risk keeps me on my toes, keeps me alert and at the top of my game.

Kiss “ZIRP” bye…bye!

Fed Chair Janet Yellen surprised traders/investors by indicating that the “Zero Interest Rate Policy” (ZIRP) may come to an end a full six-months ahead of market expectations causing a sharp sell-off from recent highs. Though no real technical damage was inflicted, this is sure to result in money managers beginning to adjust their timeline component to investment strategies.

Habitude Three
I am willing to accept loss. Losing is an integral part of the process. I know and accept that individual losses and losing periods will happen. They are endemic to trading. I do not like loss. I do not expect loss. I simply accept loss as a cost of doing business.

Fed Day

Today is Fed Day with new Fed Chair Janet Yellen at the helm. Expectation is for continued scale back of QE by another $10B with possible adjustment to the 6.5% unemployment threshold. Investors and traders reacted positively to her first congressional testimony last month, so it will be interesting how markets will react to today’s announcement and press conference. Stay Tuned!

Bullish momentum remains strong as price closed in the upper quartile of yesterday’s range, which could continue into today’s session. IF price penetrates Prior Day High (PDH) and converts, THEN further upside price targets measure 1870 – 1876 followed by extreme extensions 1881.50 – 1887.00.

Habitude Two
I am detached from the results. I think in terms of the process and the validity of the process. I understand that I am more than the trading. I do not tie a fragile ego to any day’s trading results. I have faith that over time I will make money. The results of any one trade are statistically unimportant. I think in term of probability. A single trade says nothing about me as a person.

Trade Strategy 03.18.14

Buyers reemerged yesterday and have regained control and we will continue to give the benefit to the Strong Bull.

Price is now trading above the 3DCPZ which is a “key marker” we use for trend direction. IF price penetrates the Prior Day High (PDH) and converts, THEN upside targets measure between 1860 – 1865 with TargetMaster Breakout 1868.75 Level. Pullbacks to 1842 – 1846 zone are buyable…Violation of the 1842 level suggests a reversal and measures 1834.75.

Trade Strategy: We’ll be looking to enter long side on pullbacks to key reference zones as long as prior session midpoint (1846) continues to hold. IF price pushes to statistical extremes, THEN we’ll turn opportunistic seller from key levels stated above.

Remain Flexible…ALWAYS USE STOPS!

Good Trading,

David

Habitude One
I am ready to trade. My patterns are verified. My homework is complete. My mind is clear. I have rehearsed everything. I am prepared strategically, emotionally, and financially each and every day.

Overnight low is 1823.50 and price has reversed sharply nearly 22 handles from this level and has stalled within the upper STATX Zone (1844.25 – 1845.75) This zone becomes first level of resistance and is fadeable on the short-side. Three-Day Central Pivot Zone (3D CPZ) is 1846.25 -1848.25…This zone is expected to be a formidable zone to overcome for the Bulls.

Anticipated early support between 1834 – 38 zone could offer a tradeable bounce with 1830 – 1832 zone a more important zone to hold on pullbacks. News headlines may continue to dominate trade action with continued unrest overseas…News driven algos will be turned-on and monitoring the headlines.

Habitude Twelve
I am disciplined. I behave in a way to reach my goals. I do what I intend to do. I have the intent to win through right actions. I will be patient for patterns to emerge and mature. I am decisive. I decide easily and act promptly. I act in the right way and right on time. When there is nothing to be done, I will wait.

“Beware the Ides of March”

We have switched to S&P e-mini June Contract (ESM)

So much for the anticipated low volatility rollover into June contract…Da Bears finally made the Bulls “cough-up” its latest meal driving prices deep into last month’s value zone and Point of Control (POC). This traps every new buyer at higher levels since the beginning of the month.

There have been plenty of “early warning” signs of a short-term top forming over the past two weeks, and traders have been trained to buy every pullback…”Beware the Ides of March”.

Overnight action is relatively quiet with price trading near lows…Upper price structure is now broken and momentum has shifted to favor selling retracement bounces. As traders, we are flexible to engage both sides, long and short intra-day…looking for extreme edges from which to capitalize from the uninformed trader.

Tides (price action) can turn quickly in a highly charged emotional market as is the current case, so trade strategy today is simply remain flexible to two-sided trade within the context of highlighted levels.

Remain Focused and ALWAYS USE STOPS!

Good Trading,

David

Habitude Eleven
I am courageous and I always act, even in the face of uncertainty and possible loss. Do not say, no fear. Feel the fear and act anyway. I may be frightened, but I still saddle up. I am not reckless. I act promptly in accordance with my methodology. I respect my calculations. I have a healthy respect and I balance that respect with my courage. I am an explorer. I am on a hero’s journey.

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Trading Futures, Options on Stocks and Futures, Stocks, ETFs and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. "PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS"